The Health Crisis and Your Mortgage

A lot has
changed in the last few weeks, much of it unsettling. The current COVID-19 health
crisis has created some level of uncertainty among the population and a lot of
unknowns. So, here’s a recap of what we do know with respect to mortgage
financing.

On March 4, the Bank of Canada (BoC)
lowered its overnight rate by 50 basis points to 1 ¼%, which surprised the
markets. Many thought the drop would be 25 basis points.

While Canada’s economy had been operating
close to potential with inflation on target, COVID-19 was causing a material
negative shock to the Canadian and global outlooks, and monetary and fiscal
authorities responded.

Then on Friday, March 13, The BoC lowered
its overnight rate by another 50 basis points to
¾%. This unscheduled rate decision was a proactive measure against the negative
impacts of COVID-19 to Canada’s economy.

These
moves were made to stabilize Canada’s financial system
and economy during a period of great uncertainty.

On March 18,
Prime Minster Justin Trudeau announced strategies an $82 billion support plan
that were split into two main categories: Direct financial support and tax
deferrals.

Tax Deferral

Deferring
deadlines. The deadline to file your tax returns
will be extended to June 1. If you’ve already filed your taxes and owe the
government money, you now have until Aug. 31 to pay. Businesses will also be
able to defer income tax payments until Aug. 31. The CRA will also stop
auditing businesses for the next four weeks.

Mortgage Deferral

Up to six-month
deferrals. Banks and other
mortgage lenders have agreed to defer up to six months of mortgage payments for
those impacted by layoffs and closures. This may include situations such as pay
disruption, childcare disruption, or illness. For
uninsured mortgages, many lenders offer flexible payment options as well. There
may also be relief for other credit products.

If you have an insured (high-ratio) mortgage, the three
mortgage insurers – CMHC, Canada Guaranty and Genworth Canada offer tools to
lenders that can assist homeowners who may be experiencing financial
difficulty. These include payment deferral, loan re-amortization,
capitalization of outstanding interest arrears and other eligible expenses, and
special payment arrangements.

Next Steps

If you have been impacted by the
health crisis, contact your mortgage lender to see what they can offer you.
Each situation and each lender is unique.

Also, reach out to other creditors,
such as your credit card companies, and car loan companies to see what they can
offer.

As always, I am available to help you
through this. If you have any questions or concerns, please contact me.

I am part of TMG The Mortgage Group – an award-winning Canadian mortgage brokerage with a national team of over 800 qualified and accredited mortgage brokers, agents and associates providing residential and commercial mortgage services. Since 1990, TMG has helped over a quarter million Canadians get the best financing solutions and mortgage rates through Canadian mortgage lenders from coast to coast.